She gets knocked down

The problem with this story is no one knows how it ends. Not the protagonists, who are still writing it. Not the pundits, stenographers to a car crash. Will Kevin Rudd come back to the Labor leadership? Will Julia Gillard - the toughest cookie we've possibly ever seen in the Lodge - see the threat off again?

In times such as this - where anything could happen - it's best to stick with some knowns. What can we say of the present? Internal trust and cohesion in the government is badly fractured, if not broken.

Proponents and opponents of change are briefing against one another, apparently without restraint. Someone this week thought it reasonable to leak against the $1 billion industry plan that was meant to be a building block of recovery ahead of the election campaign - a potent signifier of the extent of the current dysfunction, if one was necessary.

The media cycle is thundering out of control. Labor must not only manage the complex truths associated with the difficulties in which it finds itself - divine a way out of the windowless room - but also manage the careening perceptions of the present state of play, some wild and blatantly mischievous, some devastatingly accurate.

''Ruddmentum'' appeared unstoppable at the start of the week, an inelegant, squalling panic prompted by a bad Nielsen poll, which exploded into the news cycle. Timing was everything. The bad poll was only the sum of recent parts: the scrappy opening to the political year, the underwhelming performance of the mining tax, which served to reinforce perceptions that Labor can't manage the economy despite strong fundamentals. But it dropped like a portent of looming, irrevocable disaster.

By week's end, cabinet figures had rallied to balance not only the public messages but also the internal sentiment. Camp Kevin yanked its head in, concerned about the consequences of too much undirected chatter too soon. The Labor ship was drifting in a sea of irresolution, but not listing quite so violently.

Yet the central problem persists.

What to do, whether there is anything to do, and if there is something to do, how and when to do it?

There is also a deeper question to be considered, and this is sometimes overlooked in the rush to parse who said what on The Project. Principally the question is what are the consequences of acting versus not acting. This is a question the party comprehensively failed to ask itself in the June 2010 leadership coup. It has paid the price ever since.

Given his enduring popularity, his strengths as a performer on new and old media, his power and potential potency as a circuit-breaker, the logic of a return to Rudd seems unassailable, until you imagine what is actually required to execute it, and the ultimate consequences for Labor if peace can't be declared, finally, once and for all. If leadership change became just another stuff-up.

A grand bargain. That's the scale of ambition in the most considered quarters of Camp Kevin. Not simply cosmetic change - a new figurehead presiding over the old, riven fundamentals - but a game change.

The game-change scenario is a co-ordinated move against Gillard at the cabinet level: a majority of Gillard backers, not just the oft-mentioned Bill Shorten, switching camps and being prepared to make the shift decisive.

By that they mean the obvious: Gillard goes, and really goes - agreeing not to recontest at the election; and Wayne Swan too. ''The consequences are there. Julia can't stay. Wayne can't stay,'' insists one Rudd man. Labor would also likely lose its Senate leader: it's hard to imagine the Communications Minister, Stephen Conroy, serving in a Rudd ministry given the extent of their mutual antipathy. Possibly there would be other departures and, of course, elevations. Chris Bowen is said to have been promised Treasury if Rudd returns. Presumably the new broom philosophy would be applied liberally.

The point of this transaction is drawing the line. Someone wins and someone loses, and agrees they've lost. The situation since the last leadership battle has been irresolution and cycles of retribution, some of them petty, some spectacular. The two combatants have remained on their feet, and like Harry Potter and Voldemort, neither truly lives while the other survives.

But the idea of Gillard and Swan departing the field for Rudd is, to put it mildly, hard to get your head around. A third candidate maybe, but Rudd? Colleagues close to both laugh at the prospect. Talk is swirling at the moment of a deal to accommodate the two. Without concrete details, it's hard to assess how serious or viable a proposition that actually is.

Colleagues close to Gillard and Swan insist the current talk of accommodation is deliberate, dastardly misinformation. As one person puts it: ''People don't ride off into the sunset here while the knight rides in. That's not how this happens.''

Gillard supporters also insist the present activity is centred on building a credible illusion of momentum both with the media, which play along in brainless hourly blips in order to feed the insatiable 24/7 beast which prioritises immediacy and ''newness'' over the coherence of the story, and to create panic in the caucus. One Gillard loyalist declares proponents of the Rudd comeback are ''constantly on the phone stampeding people, telling lies to create panic''. Left unsaid in the critique is the obvious - the nasty habit of panic becoming self-fulfilling.

People on both sides of the Gillard/Rudd divide can agree at least conceptually that a shoulder tap followed by the dignified exit could be a mechanism to make leadership change a genuine circuit-breaker rather than a hypothetical one. But it seems unlikely to occur in the real world.

What of the Kevin factor? His loyal supporters say Rudd could lift Labor's vote by as much as 15 per cent. His popularity with the public has been extremely resilient, and he's a nimble communicator. Almost uniquely among our current political class, Rudd knows how to speak to voters in an era when the conventional modes of political communication are breaking down.

Research by Nielsen last September suggested Rudd could boost Labor's primary vote by 10 per cent (taking votes from the Coalition, Greens and independents). However, the pollster John Stirton heavily qualifies the number.

He says the boost applies only in a ''magic scenario'' - a bloodless coup where everyone agrees leadership change is necessary, Rudd is the only viable candidate, and everyone rallies behind the leader. In this case, the leader would have also needed to have learned a thing or two from past mistakes. Magic sometimes happens. It happened when Alexander Downer handed over the leadership of the Liberal Party to John Howard in opposition. That was precisely the scenario. Asked whether history is likely to repeat itself in 2013, Stirton sounds dubious.

''And in the absence of the magical transition, it's hard to imagine leadership change not doing significant damage,'' he says.

It is a high-risk proposition. Fresh in a number of minds is the horror show of the 2010 election campaign, which was characterised by acts of deliberate destabilisation. The fear is history would repeat itself - a new cycle of retribution, another slide backwards.

There are other practical problems. Rudd would no doubt position himself as a leader capable of taking on the various cancers afflicting the party - a desirable development, given the radioactive murk leaking out of ICAC in NSW, and the Health Services Union imbroglio.

That culture of institutionalised loathsomeness needs to be rooted out, and Rudd is sufficiently independently-minded to want to see it done.

It would be an electoral plus, necessary for Labor to sustain itself as a viable movement into the future - but then comes the obvious problem: how to campaign without the comfort of guaranteed institutional support. Would trade unions kick in the cash and resources for a leader intent on a post-election jihad?

The Australian Workers Union made a great show of public support for Gillard over the past week. The AWU boss, Paul Howes, pledged 110 per cent support for the present incumbent of the Lodge, then escalated the rhetoric, not exactly helpfully, given the internal tinderbox.

''Nothing upsets me more lately than opening newspapers on a daily or weekly basis and reading anonymous quotes from 'senior Labor sources' undermining our Prime Minister, undermining the leadership of our movement and this country. What a bunch of gutless pricks they are that they can't put their names to what they are saying,'' Howes declared in a closing address to a union shindig on the Gold Coast.

Gillard this week genuflected to Howes and to powerbroker Bill Ludwig. Not a great look from the vantage point of the general public, to be sure, a deep curtsy to the faceless men, but a gesture reflecting some basic realities of the relationship. (Some Rudd folks of course counsel journalists too inclined to take people at their word that union leaders professing undying loyalty to Labor leaders have been known to turn on the head of a coin.)

And then there's another issue: concern in some quarters that the problem isn't so much the messenger but the message. Some ministers have watched with concern as the strategy has contracted to rallying the base. Says one: ''Class warfare isn't modern Labor. Is it the Scot [Julia Gillard's communications director John McTernan]? Is it Swannie? Narrowing the perception of what we stand for isn't the way to win. We need the bolder agenda. Why aren't we talking the language of the modern economy?''

Gillard this week publicly eschewed a ''progressive'' agenda, asserting Labor's historical ties with working people. The tit-for-tat with the Greens prompted by Christine Milne's decision to end the formal agreement this week will doubtless exacerbate a trend we've seen in the past few days: both parties narrowcasting to the base. Not everybody is happy with that direction, but the answer to that question may not be Rudd. Not without a decisive sequence of events rendering the status quo untenable. Not without a decisive shift that could yet happen, but hasn't yet.

One minister says: ''Is the problem the leader or the leadership agenda? I don't know where it ends - all I know is it can't go on like this.''